I remember when I saw my first one. It was the early 1970s, and I was about 13 years old. It was small, red, and parked on my neighborhood street. The emblems identified it as a Toyota Corona, and it stood in stark contrast to the Detroit legends surrounding it.

But America would soon face long gas lines as an oil crisis gripped our nation, and these fuel-efficient cars that once seemed like aberrations would come to define the worldwide automotive future.

In the late 1980s I joined General Motors with the ambition to help the company regain its market dominance in the face of this reality. I was fortunate to work on a small team tasked with developing the first modern production electric vehicle, the EV1. This car was a revolutionary step forward in automotive technology, reflecting top-level leadership that was committed to propelling GM to the forefront of innovation.

However, in 2003, in what then-CEO Rick Wagoner would later call the worst decision of his tenure, GM killed the EV1.

The tragedy was not simply that a great car was lost; it was that America yielded the opportunity to globally lead in developing the next generation of vehicles.

Today, an opportunity exists for the United States to once again take the lead. In late 2007, Congress took a bold and bipartisan step to stimulate the development of advanced vehicles. Section 136 of the Energy Independence and Security Act empowered the Department of Energy to provide $25 billion in loans to manufacturers of advanced technology, fuel-efficient vehicles.

The Obama administration's commitment to revitalizing GM and Chrysler has been aggressive. With the bailout effort moving quickly forward, Section 136 should now be used to not just revamp, but to redefine the U.S. auto industry.

The first funds from the program were distributed to Ford, Nissan and startup sports car maker Tesla Motors, each demonstrating noticeable progress in fuel-efficient vehicles. By investing in a Detroit automaker, a foreign automaker, and a Silicon Valley startup, the DOE also saw the wisdom in funding three different approaches.

While that first announcement garnered significant attention, it is the subsequent rounds of funding that will most clearly define the future of automaking in the United States.

The president and Congress have recognized that the auto industry is on the brink of a new paradigm. To avoid the mistakes that led to the demise of the EV1, the federal government, in addition to its revitalization efforts in GM and Chrysler, must invest boldly in a new generation of entrepreneurial businesses.

It is now clear that the auto industry can no longer be defined by a handful of dominant automakers. Dozens of companies, from Massachusetts to Indiana to California, are quietly and persistently working to address this new automotive future – one based on clean mobility solutions that will offer customer-driven solutions, produce beautiful and cost-efficient vehicles, reduce our need for foreign oil, and hold the promise of tens of thousands of new "green collar" jobs.

By investing in these entrepreneurial companies, the government will accelerate America's ability to produce the products and services that will once again lead the world. As an example, Bright Automotive has requested $450 million – or less than 2 percent of the size of the fund. For just a tiny fraction of what has been given to GM and Chrysler, this investment will allow us to efficiently produce hundreds of thousands of plug-in vehicles and create about 5,000 U.S. jobs in the next five years. With the support of Section 136 loans, this kind of success could be repeated across the country at lean, fast-moving companies with good ideas and experienced automotive teams.

Section 136 holds the potential to be a significant, if not defining, catalyst in achieving the new automotive reality. But my own experience – having worked both inside the world's largest automaker and now leading a startup – has convinced me that a bold and disruptive step forward is required if America is to once again lead in the world of transportation.

While $65 billion has been committed to help restore GM and Chrysler as industry leaders, only one-hundredth of that amount has gone to bringing innovative entrepreneurial solutions to the U.S. market. Now is the time for the Department of Energy to strategically invest Section 136 funds in the best of our nation's agile new companies. That will ensure that the new global automotive future is defined and led by American ingenuity and American workers.

John Waters is CEO of Indiana-based Bright Automotive, which develops advanced technology vehicles, powertrain components and also provides consulting services for transportation companies. He previously worked for Delphi and General Motors, where he was the lead battery pack engineer on the EV1 electric vehicle. Contact John through his company's website, www.brightautomotive.com.